Euro vs Dollar Chart 12 April 2010

The weekend’s news that the Eurozone had agreed a 30bn loan facility for Greece has helped to propel the eurodollar overnight to trade in the USD13650 region, a significant gap up on Friday evening’s close at USD$1.3498.  The sudden reversal in the fortunes of the eurodollar is also attributable to the adage that markets abhor uncertainty.  This latest statement from Europe whilst encouraging, once again lacks any fine detail and the market has simply reacted to the fact that something appears to be happening.  However, we have been here before and until there is a concrete plan in place, and perhaps more importantly one that the Greeks accept, then any reaction from the euro to such statements is likely to be temporary.  It now seems likely that any firm plan will not be instigated until after the German elections which follow closely behind those in the UK.  From a technical perspective the euro vs dollar has now broken above all three shorter term moving averages but remains deep below the 200 day moving average which is the longer term bellwether from the technical trend.  At USD1.3630 we have almost breached the consolidation region created in February and early March and any further move higher to re-test USD1.38 could signal a breakout and minor recovery. However, the longer term outlook remains bearish and any temporary move on news such as this should be seen as a selling opportunity for new positions.

There is no other fundamental news in Europe today other than a level 3 announcement regarding industrial production which will have little impact on the euro vs dollar.  For the US the only item of news is the Federal Budge Balance which is forecast to improve from -220bn last time to -100bn this time.

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Eurdollar News :

Why loan facility for Greece is not enough

Will Greece exit Euro?